Retailers react to sales tax increase

Published 12:00 am Wednesday, July 9, 2003

A one-cent sales tax increase was passed on June 25 by the Greenville City Council, and it will take effect on August 1 of this year.

Sales taxes make up 31.6 percent of the city’s total revenues, which, year-to-date as of June 2003, totaled $7,888,421.48. Taxes, overall, account for 50.79 percent of the city’s receipts.

The proceeds from the increase are slated to fund several city obligations, not the least of which is a bond issue for an access road for the new Super Wal-Mart, scheduled to be built on property near Cahaba Road.

Although no one showed up for the council meeting in protest or support of the tax increase, there have been reactions to it from area retailers.

Most see the increase as a necessary evil – a trade-off to get more jobs for area residents, and believed most shoppers won’t react negatively to the addition to their sales receipts.

Linda McVey, manager of the Greenville Shoe Shop, doesn’t believe it will cause problems for her clients.

&uot;None of my customers have had anything negative to say about it,&uot; McVey said. &uot;It’s a fact of life; it’s going to happen.&uot;

The shoe retailer said that she recently had a visitor in her shop who was appalled at the current eight-cents sales tax.

&uot;She was from Atlanta, which has a six-cents sales tax,&uot; she said. &uot;She couldn’t believe we were paying more than that. But you have to remember that Georgia has the lottery to fund their education system. We only have tax increases to fund what we need.&uot;

Piggly Wiggly manager Robbie Williams agrees that the impact on customers should be minimal.

&uot;It won’t be a huge factor for my store because we have a lot of food stamp customers, and they don’t pay taxes on their purchases,&uot; he said. &uot;I haven’t heard any complaints, and don’t anticipate getting many when it takes effect in August. People are going to eat. If they don’t buy here, they would have to go to Montgomery, Lowndes, Crenshaw or Conecuh counties. None of those places have lower sales taxes than Greenville does. I don’t think anyone is going to drive 50 miles just to pay a lower sales tax on groceries.&uot;

Greenville Equipment Center owner Alan Phelps sees it a good bit differently.

&uot;It’s going to affect us the same way it’s affected Montgomery, which currently has a 10 percent sales tax rate,&uot; Phelps said. &uot;I just got off the phone with a customer in Hope Hull who is trying to find somewhere other than Montgomery to buy a mower because he doesn’t want to pay the high sales tax.&uot;

The outdoor equipment salesman said he also thinks the increase will drive more locals to spend their dollars online.

&uot;If you are shopping and looking at paying a nine percent sales tax, you can shop on the internet, and not have to pay that,&uot; he said. &uot;The more sales taxes increase, the more tempting online purchases become.&uot;

Phelps said that although he appreciates what city officials are trying to do, he thinks the move will hurt the city’s retailers in the long run.

&uot;I agree that the new jobs are what we need; we have to have them,&uot; he said. &uot;I just wish there was another solution besides an increased sales tax.&uot;

The retailer said that in essence the sales tax is unfair.

&uot;Anytime you tax &uot;across the board&uot; like that, you are tapping into dollars from elderly people or those on a fixed income, who may not have those dollars to spare,&uot; Phelps said. &uot;The new jobs won’t benefit the elderly at all. Most people don’t have extra dollars in their pockets. Anytime you increase the sales tax, you are reducing the customers’ buying power.&uot;

Phelps said property taxes were fairer means of revenue generation, but that he knows city officials would never get such a measure passed.

&uot;No one is going to vote to increase their taxes,&uot; he said. &uot;The sales tax increase is easier to get because only the council has to approve it. The general public has to approve a property tax increase, and that probably won’t ever happen.&uot;

He said he thought officials should take another look at how the business license fees are structured.

&uot;Right now, I pay more than $1,000 per year for my business license,&uot; he said. &uot;My fee is based on the amount of gross revenue my business generates. But doctors and lawyers have a cap of $225 on their business licenses. These professionals who generate large sums of money are paying a minimal license fee. I think we could come up with some of the money we need by looking at these things.&uot;

Phelps said he would be interested to see if, in a year’s time, the tax increase actually created new dollars for the city.

&uot;I think they are going to find that it will be revenue neutral, and not add anything to the city’s coffers,&uot; he said.